President Obama took charge of derailed negotiations over federal spending and the national debt at the White House Monday, ditching his favored hands-off approach for a more aggressive personal intervention into a raging debate over raising taxes. Obama met separately with Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., just days after budget talks headed by Vice President Biden collapsed.
The potential impasse is politically risky for Obama, who vowed to raise taxes on the wealthiest Americans and cut trillions of dollars in spending and who needs to strike a deal with Republicans to increase the nation’s borrowing capacity before an Aug. 2 deadline, after which the government could default on its loans.
Still, the White House and congressional Democrats are insisting that any deal must include revenue increases, while Republicans are just as adamant in opposing any tax increases. GOP leaders said the deficit should be reduced solely through budget cuts.
“My message to the president is simple: It’s time for Washington to focus on fixing itself. It’s time Washington take the hit, not the taxpayers,” McConnell said before his private meeting with Obama.
Despite the hardened approaches, the White House expressed optimism about reaching a compromise within a few weeks.
“Everyone in the room believes that a significant deal remains possible,” said White House press secretary Jay Carney. “We obviously believe a balanced approach is the right approach. … The only one that doesn’t take a balanced approach is the House Republican proposal.”
Obama recommended saving billions of dollars by ending subsidies for the oil industry, taking away tax breaks for corporate jets and a series of other measures that target the wealthiest Americans and corporations — each a litmus test, administration officials say, for Republicans’ commitment to slashing spending.
However, some critics say that by waiting to get directly involved in the talks, Obama exacerbated an already dire situation so near the debt limit deadline.
“It’s a good thing he finally showed up on this budget issue rather than just going to fundraisers and playing golf,” said Douglas Holtz-Eakin, Congressional Budget Office director under former President George W. Bush. “He wanted to wait Republicans out. That’s not smart. Now he’s going to have to explain to his own party that it’s not politically realistic to raise taxes.”
Carney dismissed suggestions that Obama waited too long to join negotiations.
“If you honestly believe that the public is out there wondering why the president wasn’t in every one of these meetings, you know, I think that’s nuts,” Carney said.
Given the global repercussions of having the U.S. government default on its debts, Dean Baker, co-director of the Center for Economic and Policy Research, said the Democrats may actually have the upper hand.
“[Conservatives] either agree to close tax loopholes or [Treasury Secretary Timothy] Geithner is going to have to hold a press conference where he says, ‘Look we have payments due,’ ” Baker predicted. “Wall Street flips out. Republicans will run back and at least approve a temporary extension. There is no way they’re going to let Wall Street collapse.”
